Future Value of an Annuity Problem-HELP!!
Here is a problem that was given to me in one of my classes and I've been up nearly all night trying to figure this thing out! I would very much appreciate if anyone can help me out on this tough question:
Your father is 50 years old and will retire in 10 years. He expects to live for 25 years after he retires- until he is 85. He wants a fixed retirement income that has the same purchasing power at the time he retires as $40,000 has today. His retirement income will begin from the day he retires until 10 years from today, and he will then receive 24 additional annual payments. Annual inflation is expected to be 5 percent. He currently has $100,000 saved and he expects to earn 8% annually on his savings. How much must he save during the next 10 years to meet his retirement goal?